*THE HON BLE SRI JUSTICE L.NARASIMHA REDDY AND *THE HON BLE SRI JUSTICE CHALLA KODANDA RAM +I.T.T.A.No.1 of 2004 % Dated 19.11.2014 # M/s. F.D.Khan & Co. .Appellant $ Commissioner of Income-Tax, Hyderabad. .Respondent ! Counsel for appellant : Sri B.Ravindra ^ Counsel for respondent : Sri J.V.Prasad < GIST: > HEAD NOTE: ? Cases referred: HON BLE SRI JUSTICE L.NARASIMHA REDDY AND HON BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.1 of 2004 ORDER: (Per LNR,J) This appeal is presented against order, dated 09.01.2003 passed by Hyderabad Bench of Income Tax Appellate Tribunal in I.T.A.No.147/Hyd/2002, referable to assessment year 1998-99. appellant is firm undertaking business in Textiles. In returns submitted for assessment year 1998- 99, appellant has shown sum of Rs.3,77,290/- as expenditure for office modification. Assessing Officer treated that as capital expenditure and did not allow deduction. Aggrieved by order passed by Assessing Officer, appellant approached Commissioner (Appeals). appeal was rejected through order, dated 07.02.2002. Thereafter, he filed I.T.A.No.147/Hyd/2002 before Tribunal and that was also dismissed. Heard Sri B.Ravindra, learned counsel for appellant and Sri J.V.Prasad, learned counsel for respondent. only controversy is as to whether expenditure incurred by appellant for modification of office premises must be treated as capital expenditure or revenue expenditure . Assessing Officer treated as former and same was affirmed by Commissioner and Tribunal. difference between revenue expenditure on one hand and capital expenditure on other hand is clearly discernible in many cases. test is endurability of asset that is acquired through amount concerned. Many time, it becomes difficult to differentiate between two in relation to certain activities. For example, alteration to existing item of immovable property is prone to be treated as either of them, depending upon perception of concerned officer or predominant object underlying expenditure. Even if it is alteration, if it is going to endure and become part of immovable property, it deserves to be treated as capital expenditure . If on other hand, modification or addition is such that it can be detached and taken away or substituted with another with little effort, it has to be treated as revenue expenditure , notwithstanding amount involved. assessee is reputed cloth showroom at Hydeabad. effecting of modifications in premises became necessary on account of retirement of one of partners. record is not clear as to whether premises are owned by firm or whether left over partners are conferred with absolute rights over property. That fact becomes relevant since repairs undertaken by owner of premises assume substantially different legal character compared to those, which are undertaken by lessee of premises. There was no finding by Assessing Officer that modification was of permanent nature of premises. It is well established that even where two views are possible, on set of facts, one that helps assessee must be adopted. We therefore allow appeal and set aside order of assessment as confirmed by Commissioner and Tribunal. amount involved shall be treated as revenue expenditure . miscellaneous petition filed in this appeal shall also stand disposed of. There shall be no order as to costs. __ L.NARASIMHA REDDY, J __ CHALLA KODANDA RAM, J Date:19.11.2014 Note: L.R.Copy to be marked. JSU HON BLE SRI JUSTICE L.NARASIMHA REDDY AND HON BLE SRI JUSTICE CHALLA KODANDA RAM I.T.T.A.No.1 of 2004 Date: 19.11.2014 JSU F.D.Khan & Co. v. Commissioner of Income-tax Hyderabad